Health insurance-related media outlets are reporting that the wall of Democrat-based support for the federal health reform law’s “individual mandate” is beginning to crack. Some Congressional Democrats are calling for a delay in the Patient Protection and Affordable Care Act’s individual mandate on account of the massive and systemic problems with the federal health insurance exchange’s website.
The individual mandate requires nearly all Americans to have health insurance beginning next year or risk tax penalties. The law’s “employer mandate” requires larger employers to offer coverage to their full-time employees or risk fines, but the Obama Administration recently delayed this employer mandate until 2015. Republicans have called for a similar delay to the individual mandate, but Democrats have resisted that call.
That might be changing. One reason the Obama Administration and Congressional Democrats balked at deferring the individual mandate is that they expected the federal health insurance exchange to open for business on October 1, and perform in a worthy fashion. That would have allowed millions of uninsured Americans a gateway to federally-subsidized insurance, allowing them to satisfy the individual mandate for 2014.
But with the federal health insurance exchange belching smoke, and repairs apparently several weeks or months away, even Congressional Democrats are worried about the political optics of requiring Americans to have health insurance under threat of penalty, but not offering millions of the uninsured an efficient portal through which to obtain that insurance.
As a practical matter, formally delaying the individual mandate makes sense. First, it synchs the start of the individual mandate with the start of the employer mandate. Second, the individual mandate is largely unenforceable for 2014 anyway, because the IRS has already deferred a reporting obligation on insurers and employers that would have allowed the agency to identify which individuals were not complying with the mandate for that year.
Third, the Administration has already excused individuals eligible for coverage under non-calendar year, employment-based health plans from the requirement to have health insurance for all of 2014. Those individuals are excused through the end of the plan’s 2013-14 fiscal year. Finally, just this week the Administration said that people who wait to sign up for exchange-based coverage until early 2014—and whose coverage isn’t effective until April 1, 2014 or even later—receive a free pass on the individual mandate penalty for the months before their coverage begins.
But there are some downsides to formally delaying the individual mandate. One is the political beating the Administration will take from Congressional Republicans, although the Administration is sure to receive those blows anyway, given the troubled launch of the federal health insurance exchange. The other is that the early months of these federal and state-based insurance exchanges will see more significant enrollment by people who need insurance because they are sick. Insurers will need many young, healthy individuals also enrolling for insurance to counterbalance the increased insurance risks posed by those who enroll for coverage and have existing illnesses.
It will be interesting to see what, if any, decisions are made on this issue in the coming weeks. Federal authorities hope to nurse the federal health insurance exchange to good health by the end of November. If that happens, the call for a delay of the individual mandate will diminish. If repairs take longer, however, the calls for the mandate’s delay will certainly grow louder and more insistent.